The company continues to expect full-year free cash flow in the range of $400 million to $500 million. The company's priority for use of free cash flow is to deleverage its balance sheet by reducing long-term debt.
The company ended the first quarter with long-term bond debt of $1.8 billion and expects to pay off approximately $300 million in floating-rate notes in 2012. In 2013, the company's goal is to pay off its $500 million of 8 percent notes, reducing bond debt to approximately $1 billion.
Interest expense in 2012 is expected to be $15 million lower than 2011 as a result of debt reduction. The full-year tax rate is expected to be in the low double digits, consistent with the average of the past three years.
The Innerwear segment, which now includes hosiery operations, reported a net sales increase of 1 percent over last year led by strong contributions from men's underwear, women's panties and sheer hosiery. Operating profit decreased 31 percent compared with last year. Outerwear segment sales decreased 9 percent but increased 4 percent excluding imagewear, with strong contributions from retail categories.
In addition to strong Champion retail activewear sales, new Hanes retail casualwear programs partially offset lower Just My Size sales. Outerwear had an operating loss in the quarter.
Gear For Sports continues to perform well and is on plan to generate full-year synergies and operating profit of $40 million. International segment sales decreased 5 percent in the quarter, while operating profit fell 84 percent.
In addition to significant cotton and other inflation, International results were affected by softness in the European imagewear category, which is under the same review process that the company conducted for its U.S. imagewear category. The Direct to Consumer segment continues to make good progress improving operating margins. In the quarter, sales increased 2 percent and operating profit tripled.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
